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The Ontario Court of Appeal has rejected a claim from the province’s Independent Electricity System Operator (IESO), which accused solar suppliers with feed-in-tariff (FIT) contracts of breaching their agreements by repowering their systems.
The Ontario Court of Appeal has ruled solar developers with FIT contracts in place with the provinces IESO can optimize their solar systems without breaking the terms of their contract.
The IESO launched an appeal with the province’s highest court after claiming suppliers had breached the contract by replacing existing solar units with more efficient panels or additional panels.
Ontario launched its FIT program in 2009 for developers to design, build, operate and maintain renewable energy facilities, including solar, in the province. Under the guidelines, the IESO committed to paying guaranteed prices for the energy delivered to the provincial grid over a 20-year period, set at an above-market rate.
Some solar suppliers with FIT contracts began updating their solar systems in 2019. In one instance, this was down to a fire. Upgrades allowed suppliers to increase the quantity of AC watts they could deliver to the provincial grid on a given day, leading to a growth in revenue.
The IESO threatened to terminate suppliers’ contracts in response, alleging the terms of the FIT contract prohibited suppliers from optimizing their facilities. Several suppliers rejected the IESO’s interpretation, claiming there was no agreed provision in the contract that prohibited optimization.
In its ruling, published earlier this week, the Ontario Court of Appeal concluded that a change in the type and number of solar panels did not breach the FIT contract. It added that the respondents, Ontario Inc. and Solar Sky Farms Inc., “were not required to give notice to the IESO or obtain its consent prior to optimizing their facilities.”
This is the second time the courts have rejected the IESO’s case, following a ruling in April this year which saw the Ontario Superior Court of Justice dismiss the IESO’s claim, when it ruled the suppliers “had properly interpreted” the contract.
Gowling WLG, an Ottawa-based law firm that represented the two respondents, said the decision “paves the way for rooftop solar suppliers with certain FIT 1 contracts to optimize their facilities and potentially increase revenues for the remainder of their FIT 1 contracts.”
In September, the government of Ontario shared plans for a large-scale competitive energy procurement exercise. It has asked the IESO to design a framework and conclude a procurement exercise by February 2026. |
